Match and Maintenance of Effort BE A FI$CAL $.T.A.R.

Match and Maintenance of Effort

BE A FI$CAL $.T.A.R.BE A FI$CAL $.T.A.R.

PRESENTERS

Carol Dobak, Chief, VR Program Unit, SMPID

Adrienne Grierson, Financial Management Analyst, SMPID Fiscal Unit

Nancy Athanassiadis, Manager, Budget and Finance Unit, New York State Department of Education, Adult Career and Continuing Education Services

MAINTENANCE OF EFFORT

OVERVIEW

• What is Maintenance of Effort• Regulatory Requirements• Not Meeting Requirements• Calculating MOE• MOE Waivers• Managing MOE from a State’s Perspective

WHAT IS MAINTENANCE OF

EFFORT?

• Maintenance of Effort (MOE) is required by many programs including the Vocational Rehabilitation Program, authorized under Title I of the Rehabilitation Act of 1973, as amended.

• Maintenance of Effort requirements ensure that state agencies receiving federal funds with a matching component do not reduce the amount of non-federal expenditures from year to year.

REGULATORY REQUIREMENTS

• Section 111(a)(2)(B) of the Rehabilitation Act and VR Program Regulations at 34 CFR 361.62(a)(1) require states to maintain a level of non-federal expenditures, from all allowable non-federal sources, in the previous fiscal year that is at least equal to non-federal expenditures from two years prior.

REGULATORY REQUIREMENTS (CONT.)

• For states with a VR agency serving individuals who are blind and a second agency service individuals with all other disabilities, MOE is determined based on the state’s total non-federal VR program expenditures for both agencies. 34 CFR 361.62(c)(1)

IMPACT OF THE MOE REQUIREMENT

• Can protect the VR program from disproportionate state budget cuts when state budgets are flat or increasing.

• Can penalize states – especially those with a history of providing more than the required match amount – when state budgets are reduced during periods of serious, prolonged economic downturns.

• Can function as a disincentive for states to provide additional funds to the VR program during periods when state budgets are increasing.

WHAT HAPPENS IF MOE IS NOT MET?

The state’s allotment is reduced in the current fiscal year by the amount of the MOE deficit. 34 CFR 361.62(c)(2)

For example, a FY 2012 shortfall over FY 2010, would result in withholding the amount of the deficit from the FY 2013 VR grant award. If the determination of the MOE deficit is made after such time as funds can be withheld from the current fiscal year’s award, then RSA can recover the penalty through an audit disallowance. 34 CFR 361 (a)(2)

REQUIREMENTS WHEN TWO STATE VR AGENCIES EXIST

Each VR agency in the state incurs the MOE penalty in direct relation to the amount each agency contributed to the MOE shortfall, i.e. meaning the amount by which expenditures from non-federal sources by each agency in the previous fiscal year were less than they were for the respective agencies for the fiscal year two years prior to the previous fiscal year. 34 CFR 361.62(c)(2)

REGULATORY RESTRICTIONS RELATED TO CONSTRUCTION

A state’s non-federal expenditures for the construction or establishment of a Community Rehabilitation Program (CRP) facility cannot be used to satisfy the MOE requirement. 34 CFR 361.62(b)

CALCULATING MOE

• The MOE level for a given year is determined by using the agency’s SF-425 from two years prior.

• That is, in order to determine the level of non-federal expenditures required for FY 2012, RSA uses the non-federal expenditures reported on the SF-425 from FY 2010.

• RSA then compares the FY 2010 non-federal expenditures to determine the minimum amount of FY 2012 non-federal expenditures required.

CALCULATING MOE (CONT.)FEDERAL FINANCIAL REPORT

(Follow form instructions)

1. Federal Agency and Organizational Element

2. Federal Grant or Other Identifying Number Assigned by Federal Agency (To report multiple grants, use FFR Attachment)

Page

1

Of

Pages

3. Recipient Organization (Name and complete address including ZIP code)

4a. DUNS Number

4b. EIN

5. Recipient Account Number or Identifying Number

(To report multiple grants, use FFR Attachment)

6. Report Type

Quarterly

Semi-Annual

Annual

Final

7. Basis of Accounting

Cash Accrual

8. Project/Grant Period

From: (Month, Day, Year)

To: (Month, Day, Year)

9. Reporting Period End Date

(Month/Day/Year)

10. Transactions Cumulative

(Use lines a-c for single or multiple grant reporting)

Federal Cash (To report multiple grants, also use FFR Attachment):

a. Cash Receipts

b. Cash Disbursements

c. Cash on Hand (line a minus b)

(Use lines d-o for single grant reporting)

Federal Expenditures and Unobligated Balance:

d. Total Federal Funds Authorized

e. Federal Share of Expenditures

f. Federal Share of Unliquidated Obligations

g. Total Federal Share (sum of lines e and f)

h. Unobligated Balance of Federal Funds (line d minus g)

Recipient Share:

i. Total Recipient Share Required

j. Recipient Share of Expenditures

k. Remaining Recipient Share to Be Provided (line i minus j)

Program Income:

l. Total Federal Program Income Earned

m. Program Income Expended in Accordance with the Deduction Alternative

n. Program Income Expended in Accordance with the Addition Alternative

o. Unexpended Program Income (line l minus line m or line n)

11. Indirect Expense a. Type b. Rate c. Period From Period To d. Base e. Amount Charged f. Federal Share

g. Totals:

12. Remarks: Attach any explanations deemed necessary or information required by Federal sponsoring agency in compliance with governing legislation:

13. Certification: By signing this report, I certify that it is true, complete, and accurate to the best of my knowledge. I am aware that

any false, fictitious, or fraudulent information may subject me to criminal, civil, or administrative penalties. (U.S. Code, Title 18, Section 1001)

a. Typed or Printed Name and Title of Authorized Certifying Official c. Telephone (Area code, number and extension):

d. Email Address:

b. Signature of Authorized Certifying Official e. Date Report Submitted (Month, Day, Year):

14. Agency use only:

Standard Form 425

OMB Approval Number: 0348-0061

Expiration Date: 10/31/2011

Paperwork Burden Statement According to the Paperwork Reduction Act, as amended, no persons are required to respond to a collection of information unles s it displays a valid OMB Control Number. The valid OMB control number for this information collection is 0348-0061. Public reporting burden for this collection of information is estimated to average 1.5 hours per response, including time for reviewing in structions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collectio n of information. Send comments regarding the burden estimate or any other aspect of this collection of information, includin g suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project ( 0348 -0060), Washington, DC 20503.

Where is this information on the SF-425, Federal Financial Report?

•Line 10.j. Recipient Share of Expenditures is the line item on the SF-425 where non-federal share is reported.•Line 10.j. in the FINAL SF-425 for FY 2010 would be compared to Line 10.j. for the latest FY 2012 SF-425.

CALCULATING MOE (CONT.)

Example for a state with one VR agency:

Non-Federal Expenditures reported on Line 10.j. of the SF-425

FY 2010: $7,942,314

FY 2012: $7,581,257

Difference: -$361,057

•FY 2012 is less than FY 2010, hence a MOE deficit.

•FY 2013 VR award will be decreased by $ 361,057


Example for a state with two VR agencies

Non-Federal Expenditures reported on Line 10.j. of the SF-425

Blind GeneralTotal State

FY 2010 $1,224,958 $4,994,720 $ ,219,678

FY 2012 $1,304,979 $4,854,700 $ ,159,679

Difference: $80,021 -$140,020 -$59,999


• Looking at the last column, the state’s non-federal expenditures in FY 2012 were less than the state’s level of non-federal expenditures required, as determined in FY 2010. The state has a MOE deficit.

• However, when we look at agencies individually, we note that the blind agency exceeded its MOE requirement by $80,021.

• The general agency, however, had a MOE shortfall of $140,020.

• In this instance, the amount of the state’s MOE deficit, or shortfall, of $59,999 will be deducted from the FY 2013 federal award for the general agency. Its “sister” agency, the blind agency, helped reduce the amount of the deficit.

REQUESTING A MOE WAIVER

If a state does not meet it’s MOE requirement, RSA may waive or modify the MOE penalty.

•Rehabilitation Act Section 111(a)(2)(C)

•VR Program Regulations 34 CFR 361.62 (d)(1)(i)

Under WhatCircumstances are

Waivers or Modifications

Granted?

The Rehabilitation Act authorizes the Secretary to grant a waiver or modification of the MOE penalty when such an action would be “an equitable response to exceptional or uncontrollable circumstances affecting the State.” Rehabilitation Act Section 111(a)(2)(C)

REQUESTING A MOE WAIVER (CONT.)

Additional Circumstances

• The Secretary may grant a waiver or modification when a state has experienced a major natural disaster or serious economic downturns that cause significant unanticipated expenditures or reductions in revenue that result in a general reduction of programs for the state. 34 CFR 361.62 (d)(1)(i)



• The Secretary may grant a waiver or modification if the shortfall was caused by the state making substantial expenditures in the VR program for long-term purposes due to the one-time costs associated with the construction of a facility for CRP purposes, the establishment of a CRP, or for the acquisition of equipment. 34 CFR 361.62 (d)(1)(ii)



• Finally, the Secretary may grant a waiver or modification of the MOE requirement for construction if the Secretary determines that a waiver or modification is necessary to permit the state to respond to exceptional or uncontrollable circumstances, such as a major natural disaster, that result in significant destruction of existing facilities and require the state to make substantial expenditures for construction or establishment of a facility for CRP purposes in order to provide VR services. 34 CFR 361.62(b) and 34 CFR 361.62 (d)(2)


• Submit a letter to RSA. Include supporting documentation explaining the circumstances that contributed to the deficit and state how those circumstances were unanticipated or out of the state’s control.

• Submit numbers and tables in federal fiscal year (FFY) format. The federal fiscal year is from October 1 through September 30.


Submit the following by state fiscal year (SFY) for the year the MOE deficit was incurred and the two prior fiscal years (for example, for a MOE deficit incurred in FY 2012, submit information for FY 2010, FY 2011 and FY 2012) certified in writing by the state budget office:

•Total state revenues (identify General Fund revenues and, if applicable, other state revenues).

•Total state appropriations (identify state appropriations from the General Fund and, if applicable, other state appropriations).

For MOE Deficits Caused by Economic Downturn in the State:

Submit the following by federal fiscal year (FFY) for the year the MOE deficit was incurred and the two prior fiscal years certified in writing by the state budget office:

1)Total state appropriations (identify state appropriations from the General Fund and, if applicable, other state appropriations). This data element is the same as Number 1 in Slide 22. The information should be provided as an FFY data element, rather than an SFY data element.•State funds to support the Title I VR program

o State appropriation for the Title I VR programo Other state funds (e.g., fringe benefits) allocated to the Title I VR program, if

calculated separately from the total funds appropriated to the VR program.

For MOE Deficits Caused by Economic Downturn in the State (cont.):

Submit the following data elements for the year the MOE deficit was incurred and the two prior fiscal years. These data should be consistent with data submitted to RSA in the agency’s most recent SF-425.

1)Total non-federal expenditures for the VR program, including all non-federal expenditures incurred by the VR program regardless of the source of those funds (e.g. state appropriations, third-party cooperative arrangements, or interagency transfers) or the purpose of those expenditures.

2)Total non-federal expenditures for the construction or establishment of a CRP, if any are included in the reporting of total non-federal expenditures above.

For MOE Deficits Caused by Economic Downturn in the State (cont.):

If the MOE deficit was caused by substantial one-time expenditures under the VR program for long-term purposes for:

1)the construction of a facility for CRP purposes;

2)the establishment of a CRP in order to provide VR services; or,

3)the acquisition of equipment;

Provide sufficient supporting documentation that outlines the purchases made, the need for the purchases, the benefit to the VR program, and the cost of those purchases.

For MOE Deficits Caused by 0ne-Time Expenditures:

WHEN MIGHT A STATE CONSIDER NOT

REQUESTING A WAIVER?

• Remember, the MOE deficit is generated from comparing MOE levels from the previous fiscal year to those from the fiscal year two years prior to the previous fiscal year.

• However, the MOE penalty is taken from the current fiscal year.

• If a state cannot fully match its current fiscal year award, it must determine whether a MOE waiver request is necessary.

IMPACT OF THE MOE WAIVER RSA’s MOE waiver determination should provide as much relief as possible during prolonged periods of state revenue decreases to help minimize the incentive to decrease state funding for the VR program.

A State’s Perspective

MANAGING MOE

Some Questions for You…•For how many does MOE = match?•For how many is MOE met with state appropriations?•For how many has that been an issue in the last few years?•How many present are involved in actual processing of expenditures that contribute to match?•What questions do you hope to have answered at this session?

Meeting MOE requires Cooperation

•Conflicting needs of each office can present challenges. •Is good planning enough?•Not Just a federal Issue – Growing match in fiscally responsible way for state.

Technical Considerations

•What Funds Count toward MOE -- any state funds to support the program for program admin or provision of services. Program income is not state money because it is earned with VR funds; it becomes an addition to your states grant award. •When Does RSA Measure MOE – You can accumulate MOE until September 30 of second year of award. •Actions that Change MOE Subsequent to a Grant Closing

o Refundso Court orders; ALJ orders

•Required Actions by Stateo Revise Financial Reportingo Meet Revised MOE level

For More Information: Section 111 of the Rehabilitation Act, Payment to States VR Program Regulations at 34 CFR 361.62, Maintenance of Effort Requirement

Match and Maintenance of Effort BE A FI$CAL $.T.A.R.

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